SR Metals, Inc. v. Reyes

Facts:

Each of the petitioners was awarded a 2-year Small- Scale Mining Permit (SSMP) by the Provincial Mining Regulatory Board of Agusan del Norte; they were allowed to extract Nickel and Cobalt (Ni-Co) in a 20-hectare mining site in Sitio Bugnang, Brgy. La Fraternidad, Tubay, Agusan del Norte. The EMB sent the mining corporations a Notice of Violation informing them that they had exceeded the allowed annual volume of 150,000 MTs combined production as their stockpile inventory of Nickeliferous ore had already total 177,297 dry metric tons (DMT). Then, DENR Secretary Angelo T. Reyes issued a Cease and Desist Order (CDO) against the mining corporations suspending their operations for their operations for the following reasons:

1. The excess in 1) annual production of SR Metals, Inc., 2) maximum capitalization, and, 3) labor cost to equipment utilization of 1:1 is, by itself, a violation of existing laws.

2. The ECCs issued in favor of San R Construction Corporation and Galeo Equipment Corporation have no legal basis and [are] therefore considered null and void from the beginning. Similarly, the small scale mining permits that were issued by reason of such ECCs are likewise null and void.

DOJ categorically concluded that the term 'ore' should be confined only to Ni-Co, that is, excluding soil and other materials that are of no economic value to the mining corporations. This is considering that their ECCs explicitly specified '50,000 MTs of Ni-Co ore.' The mining corporations then filed before the CA a Petition for Certiorari with prayer for Temporary Restraining Order and/or Preliminary Injunction, imputing grave abuse of discretion on the part of DENR in issuing the CDO but was denied the mining corporations' petition, not only because the ECCs have been mooted by their expiration, but also due to its recognition of the power of the DENR to issue the CDO as the agency reposed with the duty of managing and conserving the country's resources under Executive Order 192.

Issue:

Whether or not there is a correct interpretation of the 50,000 MT limit.

Held:

No. There are two different laws governing small-scale mining: PD 1899 and RA 7076. According to Section 1 of PD 1899:

Small-scale mining refers to any single unit mining operation having an annual production of not more than 50,000 metric tons of ore and satisfying the following requisites:

1. The working is artisanal, whether open cast or shallow underground mining, without the use of sophisticated mining equipment;

2. Minimal investment on infrastructures and processing plant;
3. Heavy reliance on manual labor; and

4. Owned, managed or controlled by an individual or entity qualified under existing mining laws, rules and regulations.

While under Section 3(b) of RA 7076, small-scale mining refers to 'mining activities which rely heavily on manual labor using simple implements and methods and do not use explosives or heavy mining equipment.' Significantly, this definition does not provide for annual extraction limit unlike in PD 1899.

DOJ Opinion No. 74, Series of 2006 concluded that as nothing from RA 7076 speaks of an annual production limit, Section 1 of PD 1899 should be considered impliedly repealed by RA 7076, the later law. However, while these two laws tackle the definition of what small-scale mining is, both have different objects upon which the laws shall be applied to. PD 1899 applies to individuals, partnerships and corporations while RA 7076 applies to cooperatives.

The DENR, being the agency mandated to protect the environment and the country's natural resources, is authoritative on interpreting the 50,000- MT limit. MAO No. MRD-41 specifies measuring the 'run-of-mine ore,' meaning the ore as it emerges from the mine, i.e., before treatment. This definition is congruent with RA 7942 or The Philippine Mining Act of 1995.